FIRST SECTION

DECISION

Application no. 28323/18 LAURUS INVEST HUNGARY KFT and CONTINENTAL HOLDING CORPORATION against Hungary

The European Court of Human Rights (First Section), sitting on 16 March 2021 as a Committee composed of:

Erik Wennerström , President, Lorraine Schembri Orland, Ioannis Ktistakis , judges, and Liv Tigerstedt , Deputy Section Registrar ,

Having regard to the above application lodged on 13 June 2018,

Having regard to the observations submitted by the respondent Government and the observations in reply submitted by the applicants,

Having deliberated, decides as follows:

THE FACTS

1 . A list of the applicants is set out in the appendix. The first applicant is a limited liability company incorporated under Hungarian law and seated in Budapest. The second applicant is a company established under the laws of California, USA, based in Beverly Hills. They were represented before the Court by Mr P. Köves , a lawyer practising in Budapest.

2 . The Hungarian Government (“the Government”) were represented by their Agent, Mr Z. Tallódi, of the Ministry of Justice.

3 . The facts of the case, as submitted by the parties, may be summarised as follows.

4 . The application concerns the revocation of the applicant companies ’ licences to run amusement arcades operating slot machines in Hungary. The background of the case is set out in Laurus Invest Hungary KFT and Others v. Hungary (( dec. ), nos. 23265/13 and 5 others, ECHR 2015 (extracts)). Both applicants were also applicants in Laurus (cited above).

5 . Following the Court ’ s decision in Laurus (cited above), on 3 May 2016 the Budapest High Court gave a partial judgment and an interim judgment in the case having been lodged against the State by the first applicant and subsidiaries of the second applicant for damages caused by the impugned measures.

6 . The High Court partially granted the applicants ’ claims in its interim judgment and – by applying European Union law – found the State liable for damages for the violation of the principle of protection of legitimate expectations. However, it rejected the applicants ’ other claims concerning the tax burden increase, the loss of profits and other expected gains related to the impugned prohibition on amusement arcades operating slot machines. The court pointed out that there was an absence of direct causal link between the alleged damages, if any, and the impugned measures.

7 . Upon appeal, by its judgment dated 31 March 2017, the Budapest Court of Appeal upheld the first instance judgment with partly different reasoning.

8 . On 13 December 2017, following the applicants ’ petition for review, the Kúria reversed the first and second instance court ’ s partial and interim judgment and rejected the applicants ’ claims in their entirety. The Kúria found that – in the absence of a cross-border element – European Union law was not applicable, consequently the dispute fell solely under the scope of domestic law under which the liability of the State could not be established.

9 . The applicant companies did not file a constitutional complaint against the domestic court decisions referred to above.

10 . The Fundamental Law of Hungary provides as follows:

Article XIII

“(1) Everyone shall have the right to property and inheritance. Property shall entail social responsibility.

(2) Property may only be expropriated exceptionally, in the public interest and in those cases and ways provided for by an Act, subject to full, unconditional and immediate compensation.”

Article XV

“(1) Everyone shall be equal before the law. Every human being shall have legal capacity.

(2) Hungary shall guarantee fundamental rights to everyone without discrimination and in particular without discrimination on the grounds of race, colour, sex, disability, language, religion, political or other opinion, national or social origin, property, birth or any other status.”

COMPLAINTs

11 . The applicant companies alleged that the revocation of their licences to operate amusement arcades with slot machines in Hungary amounted to an unjustified interference with their rights under Article 1 of Protocol No. 1, read alone and in conjunction with Article 14 of the Convention.

THE LAW

12 . The applicant companies submitted that the impugned legislative changes removing their licences had infringed their rights under Article 1 of Protocol No. 1 to the Convention, taken alone and in conjunction with Article 14 of the Convention.

13 . Article 1 of Protocol No. 1 reads as follows:

“Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.

The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.”

14 . Article 14 of the Convention reads as follows:

“The enjoyment of the rights and freedoms set forth in [the] Convention shall be secured without discrimination on any ground such as sex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other status.”

15 . The Government submitted that the applicant companies should have pursued a constitutional complaint under sections 26 or 27 of the Constitutional Court Act. The applicant companies disagreed, arguing in essence that the constitutional complaint was not an effective remedy.

16 . The Court has already held that a constitutional complaint under section 26(1) and/or section 27 of the Constitutional Court Act is an effective remedy normally to be exhausted for the purposes of Article 35 § 1 of the Convention in situations where the application concerns Convention rights equally protected by the Fundamental Law of Hungary (see Szalontay v. Hungary ( dec. ), no. 71327/13, 12 March 2019).

17 . The present case concerns complaints about alleged breaches of protection of property and of prohibition of discrimination which are enshrined in Article 1 of Protocol No. 1 and Article 14 of the Convention, likewise in Articles XIII and XV of the Fundamental Law, respectively (see paragraph 10 above). It follows that the constitutional complaint would have been an effective remedy to exhaust in the circumstances.

18 . Since the applicant companies did not avail themselves of this legal avenue, the application must be rejected for non-exhaustion of domestic remedies, according to Article 35 §§ 1 and 4 of the Convention.

For these reasons, the Court, unanimously,

Declares the application inadmissible.

Done in English and notified in writing on 15 April 2021 .

Liv Tigerstedt Erik Wennerström Deputy Registrar President